Two decades ago, we fought, trampled, and even killed each other over little sacks of beans. Today, we realize how stupid it all was — but our behavior hasn’t changed.
On November 5, 1999, Frances and Harold Mountain sat crouched on the floor of a Las Vegas divorce courtroom, divvying up their most valued asset.
It wasn’t the house. It wasn’t the car. It wasn’t the computer, the appliances, the jewelry, the books, or the CDs. The hotly contested asset at hand was their Beanie Baby collection.
“Spread them out on the floor,” ordered the judge, “and I’ll have [you] pick one each until they’re all gone.” Frances made a beeline for Maple the Bear.
At the time, the little bean-filled sacks were more than a toy: they were an investment vehicle. Fueled by a rabid collectors’ market, Ty Inc. had just exceeded $1B in annual sales. Certain “retired” characters were going for as much as $13k on the resale market — 3,000x their original price.
Frances and Harold Mountain, recently divorced, duke it out over
their Beanie Baby collection in court (Associated Press; 1999)
Unbeknownst to the hapless rubes above, it was all about to come crashing down.
How did one man convince the world that these glorified stuffed animals were worth their weight in gold? The answer is tied to our very human nature — and it helps explain why we continually fall victim to speculative bubbles.
Phase 1: The creation of a mania
Ty Warner got his start as a sales rep at Dakin Toy Company, then the world’s largest manufacturer of plush toys, in the early 1970s.
He quickly became the Dakin’s top salesman, aided in part by his marketing antics: When meeting with clients, he’d build intrigue by emerging from a white Rolls-Royce, festooned with a full-length fur coat and a cane.
In 1986, Warner had a crazy idea that changed the course of his life.
At the time, most plush toys were filled with stiff, rigid cotton. Warner decided that plastic pellets (or, as he later called them, “beans”) would allow for more flexible, “realistic” toys.
He began to work on his idea on the side — but when Dankin found out, he was promptly fired. So, Warner decided to launch his own toy company in a suburb outside of Chicago. He dubbed it “Ty Inc.”
Initially, buyers told Warner his toys were flimsy pieces of crap. “Everyone called them roadkill,” he later said. “They didn’t get it.”
But behind the scenes, Warner had a plan up his fur-lined sleeve — and Beanie Babies were about to spark a worldwide mania........MUCH MORE
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"Still humping the American Dream, that vision of the Big Winner somehow emerging from the last minute pre—dawn chaos of a stale Vegas casino. Big strike in Silver City. Beat the dealer and go home rich. Why not? I stopped at the Money Wheel and dropped a dollar on Thomas Jefferson—a $2 bill, the straight Freak ticket, thinking as always that some idle instinct bet might carry the whole thing off. But no. Just another two bucks down the tube. You bastards! No. Calm down. Learn to enjoy losing....
-Fear and Loathing in Las Vegas
Excuse me, I have to take a moment
